Stocks retreat amid budget deadlock while Treasuries, gold fall

U.S. stocks fell, halting a six-day rally in the Standard & Poor’s 500 Index, as the standoff in federal budget negotiations overshadowed a drop in jobless claims and growth in retail sales. Treasuries declined while precious metals led losses in commodities.

The S&P 500 lost 0.6 percent to 1,419.45 at 4 p.m. in New York, ending its longest rally since August, and Europe’s regional benchmark stock index retreated from an 18-month high. Ten-year Treasury yields rose for a third day, adding three basis points to 1.73 percent. Gold lost 1.2 percent and silver slid 4.2 percent as the Dollar Index halted a three-day slump, with the U.S. currency stronger against 12 of 16 major peers.

Stocks turned lower as Republican House Speaker John Boehner said the White House is not serious about cutting spending. President Barack Obama said the negotiations are “still a work in progress.” Equities pared losses as the two planned to meet at the White House later today.

“We’ve had good economic data yet people are still anxious to see what comes out of the negotiations in Washington,” said Peter Jankovskis, who helps oversee $3 billion of assets as co- chief investment officer at Lisle, Illinois-based Oakbrook Investments LLC. He spoke in a telephone interview. “We’ll see a range-bound market until we get something definitive.”

The deadlock in talks to avoid the so-called fiscal-cliff of automatic spending cuts and tax increases has whipsawed markets since the Nov. 6 election, sending the S&P 500 down as much as 5.3 percent before a rebound that erased most of the decline.

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Newmont Mining Corp. and Mosaic Co. dropped at least 1.4 percent to pace losses in commodity shares. Phillips 66, the crude refiner that was spun off from ConocoPhillips in May, dropped 1.6 percent on plans to raise as much as $400 million in an initial public offering. CVS Caremark Corp., the largest provider of prescription drugs in the U.S., climbed 2 percent after forecasting profit that beat analysts’ estimates. Best Buy Co. jumped 16 percent on a report that founder Richard Schulze will offer to take the company private by Dec. 15.

The S&P 500 rose as much as 0.2 percent in early trading and 10-year yields climbed more than four basis points. First- time claims for unemployment insurance declined by 29,000 to 343,000 last week, the lowest level since early October and adding to evidence the labor market is improving. U.S. retail sales increased 0.3 percent in November amid rebounding demand for automobiles and holiday shopping.